Corporate governance statement
The Company is committed to high standards of corporate governance. The Board is accountable to the Company’s shareholders for good corporate governance. The code of best practice, set out in Section 1 of the Combined Code as amended from time to time and appended to the Listing Rules of the Financial Services Authority (the ‘Combined Code’), has been adopted as the Company’s corporate governance statement.
In accordance with the Listing Rules, the Company is required to report firstly on how it applies the main principles of the Combined Code 2008 and secondly to confirm that it has applied the Code’s provisions or, where it has not, to provide an explanation. The following section outlines the way in which the Company has applied the main and supporting principles in the Code.
The Board provides entrepreneurial leadership of the Company within a framework of prudent and effective controls, which enables risk to be assessed and managed. The Board sets the Company’s strategic aims, ensures that the necessary financial and human resources are in place for the Company to meet its objectives and reviews management performance. The Board sets the Company’s values and standards and ensures that its obligations to its shareholders and others are understood and met.
As a unitary Board, all Directors are involved in, and responsible for, the development of the Company’s strategy. The Non-executive Directors review the performance of the Company with the Executive Directors on a regular basis. The Board delegates certain of its functions to committees consisting of Non-executive Directors, as detailed within this report. The Board of the Company routinely meets seven times a year and additionally when necessary to consider all matters relating to the overall control, business performance and strategy of the Company, and for these purposes the Board has drawn up a schedule of matters reserved for Board decision which it reviews at least annually. Broadly, the Board has reserved to itself major strategic and financial decisions, including investment and divestment decisions, approval of business and financial plans, approval of significant alliance or codeshare partnerships, significant contracts and capital commitments of greater than £10 million.
The Board is led by the Chairman and the executive management of the Company is led by the Chief Executive. Their respective roles are more fully described in the terms of reference on the Company’s investor relations website, www.bashares.com. The Chairman is responsible for setting the Board agenda and ensuring that it works effectively. Working with the Secretary, he ensures that Board members receive accurate, timely and clear information. Of the 10 members serving at the year end, excluding the Chairman, two were Executive Directors and seven were Non-executive Directors (of which six are considered independent for Combined Code purposes). All seven Non-executive Directors are drawn from a diverse range of business and other backgrounds, bringing a broad spectrum of views and experiences to Board deliberations. This diversity of background and experience is identified by the Board members as one of the strengths of the Board. Maarten van den Bergh is the Board’s Senior Independent Director. In this role he is available to the shareholders should they have any concerns that they have been unable to resolve through normal channels, or when such channels would be inappropriate. He is also responsible for leading the Board’s discussions on the Chairman’s performance and would lead the process leading to the appointment of a new Chairman, when appropriate.
A statement of the Directors’ responsibilities in respect of the financial statements is set out in the responsibilities statements and a statement on going concern is given in the Chief Financial Officer's report.
The Non-executive Directors scrutinise the performance of the management in order to be satisfied as to the integrity and strength of financial information, controls and risk management. They have a prime role in appointing, removing and succession planning of senior management and, through the Remuneration Committee, they are responsible for determining appropriate levels of remuneration for the Executive Directors.
Although the Non-executive Directors are eligible for non-contractual travel concessions in addition to their fees, this is not considered to affect their independence.
All Directors receive regular information about the Company so that they can play as full a part as possible in Board meetings. Papers for Board and Committee meetings are typically distributed in the week prior to the relevant meeting. All Board members have access to the Secretary for any further information they require. If any of the Non-executive Directors has any concerns with the running of the Company, they would first discuss these concerns with one of the Executive Directors, the Secretary or the Chairman. If their concerns cannot be resolved in this way, then they are recorded in the Board minutes. No such concerns arose during the year.
Non-executive Directors are encouraged to visit the Company’s operations and to speak to customers and employees. They are also encouraged to attend the annual investor day where they can discuss corporate governance matters with major shareholders. Independent professional advice would be available to Directors in appropriate circumstances, at the Company’s expense. No such advice was needed during the year in question.
All Directors are required to submit themselves for re-election every three years. New Directors are appointed to the Board on the recommendation of the Nominations Committee. In December 2009, Rafael Sánchez-Lozano Turmo joined the Board following the signing of the Memorandum of Understanding with Iberia. Although the Committee is currently satisfied with the composition of the Board, it has been conducting a search for an additional independent Non-executive Director following the retirement of two Non-executives from the Board at the Annual General Meeting in July 2009.
The Secretary ensures that the Board members receive an appropriate induction and further training as necessary. The Board receives briefings on changes in regulation or law, as circumstances require. This has included training in relation to the implications of the Companies Act 2006 as various sections of it came into force. More recently the Board has reviewed and responded to the Consultation on the revised UK Corporate Governance Code.
The appointment and removal of the Secretary is a matter for the Board as a whole.
Rules about the appointment and replacement of Directors are set out in the Company’s Articles of Association. The Directors’ powers are conferred on them by UK legislation and by the Company’s Articles of Association.